Does Foreign Direct Investments Contribute to Employment? Empirical Approach for The Commonwealth of Independent States

Abstract

The literature regarding the effect of foreign direct investments (FDI)on employment especially indirectly (e.g. wage level, skill based labordemand) for individual countries and country groups has revealedcontradictory results so far. This paper aims to analyze the effect ofFDI on employment by macro-level perspective for the Commonwealth of Independent States (CIS) which has not been analyzed so farand has still vital importance for those countries like other transitioneconomies and developing countries in the world. In this context, byutilizing the panel data of nine CIS countries over the period 1995-2013, we explored the nexus between FDI and employment by performing Pedroni’s (1999, 2004) and Kao’s (1999) cointegration tests.Findings of the paper do indicate not only the existence of a long-runpositive relationship between FDI and employment, but also the limited employment-generating effect of FDI.